the money in deposits keep growing. It is close to 974,000 million euros, according to the latest data from the Bank of Spain for March. The figure is 5.5% higher than a year ago. The Spaniards continue to trust this risk-free savings product, which currently offers returns of just over 1% at best. Although they are far from being able to beat the high inflation, which stands at 8.4%, they do make it possible to soften the loss of purchasing power.
Today, you can only find remunerations of 1% or higher in foreign banks through the Raisin platform, 100% online. Some of its collaborating entities, such as Banco Progetto or Haitong, have made small increases in interest in recent weeks. The market is already discounting an increase in official interest rates by the European Central Bank (ECB) this summer. All in all, and although the yield on sovereign debt has risen sharply, experts warn that deposits, with few exceptions, will take time to transfer the rise in interest rates to remunerations.
“Since the beginning of the year we have seen how several of our collaborating banks have increased the interest rates of their most popular products to capture liquidity in the Spanish market. Longer maturities have experienced increases, but we have also observed increases in the offers of one and two years on our platform,” says Mónica Pina, general director of Raisin Spain, who maintains that “these increases are due to the banks’ liquidity needs.”
Right now, it’s Italian Project Bank the one that markets the most profitable deposit on the market, with an interest of 1.30% APR at 36 months from 10,000 euros. For that amount, after three years, 390 euros gross would be obtained. In the case of investing 30,000 euros, the return would reach 1,170 euros, and for 75,000 euros, 2,925 euros would be earned. In Italy there is no tax withholding for non-residents in the country. For a term of 24 months, pay 1.21% APR. For both periods, the entity has recently raised profitability by 10 basis points.
Privatbanka, from Slovakia, gives 1.23% APR at 36 and 48 months, 1.22% APR at 60 months and 1.14% APR for 24 months. The minimum amount required is 5,000 euros.
For its part, the French bank younited It has a fixed term from 2,000 euros at 36 months at 1.18% APR and 24 months at 1% APR.
the portuguese Haitong rent 1.16% APR for a term of 36 months. In the case of 24 months, the interest has risen from 1.07% APR to 1.11% APR. The minimum amount required to contract these deposits is 10,000 euros.
J&T Banka (Czech Republic) offers 1.14% APR at 36 months, 1.09% APR at 30 months and 1.04% APR at 24 months, also from 10,000 euros.
The entity System Bankingfrom Italy, gives a 1.14% APR but for a long term, of 120 months, although from 5,000 euros.
Blue Or Bank (Latvia) has a fixed term at 1.10% APR for 36 months. It only takes one euro to hire this deposit. and the belgian CKV gives 1% both in the medium and long term, from 5,000 euros.
All these entities are backed by the Deposit Guarantee Funds of their respective countries, which cover up to 100,000 euros per client and bank.
In Spain, the average interest on fixed-term deposits is 0.01% for up to one year, 0.22% between more than one year and up to two years, and 0.04% for more than two years. Experts see little improvement in yields in the short term, although they will begin to be somewhat more attractive as key rates gradually rise. They estimate that, except for specific offers, no significant changes will be seen before 2023.
“The first signs we are already seeing in long-term rates, but we are not necessarily going to see big increases, since we start from a deposit rate of -0.5% and rates have been low for 10 years,” he points out. Pineapple.
Marta Alberni and María Rodríguez, from the banking area of Afi (International Financial Analysts), maintain that banks do not have liquidity problems, thanks not only to financing operations with the ECB but also to the increase in deposits during the pandemic, so that “it is not foreseeable that there will be a tension in the liquidity of the system that will give rise to a toughening of price competition on the liability side”.
In his opinion, “the transfer of the increase in rates to deposits could be slower than that which the asset is suffering”, given the strong competition that housing has been experiencing in the mortgage segment in recent months. They explain that transferring the rise in the curve to deposit remuneration rates quickly would limit the positive effect of the rise in rates on bank margins for mortgages.
Taxation of fixed terms
Fiscal retention. In Europe, the interests generated by deposits and savings accounts of individuals, regardless of the country where it is invested, have tax withholding. In general, this withholding is harmonized and the types are very similar. Residents in Spain will have to declare the interest of the fixed installments contracted through Raisin when they make the income statement. And if you have more than 50,000 euros invested abroad, you must also present form 720. To cancel or reduce the tax withholding in the foreign country where the money has been deposited, you must present a tax residence certificate issued by the Tax agency. It is a 100% online and simple procedure whose purpose is not to pay taxes twice, but only in Spain. In most countries you can cancel the retention of the deposit with the aforementioned certificate. In other countries, the withholding will apply, although it can be offset in Spain when making the personal income tax return. In Spain, the tax rate ranges between 19% and 26%. In Austria, the standard withholding tax is 25%; in Belgium, 30%; in Slovakia, 19%; in the Czech Republic, 15%, and in Bulgaria, 10%.
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